US interest-rate increases

Conditions at the time

After lowering the policy rate to 1% in 2003, the Federal Reserve began reversing monetary accommodation.

How events unfolded

The target rate rose to 1.25% on 2004/6/30 and reached 5.25% on 2006/6/29.

Stakeholders and impacts

Borrowing households, businesses, banks and bond investors had different exposures to short-term rate changes.

Information available at the time

Official change records show a sequence of 25bp increases, revealing the pace of tightening.

Findings confirmed later

Individual decision records distinguish the start of the hiking period from the last hike date.

Alternative interpretations and limitations

The target policy rate is not identical to mortgage rates; causation concerning subsequent housing distress requires separate analysis.

Source-based context and interpretation

The Federal Reserve's decision record shows repeated increases ending with a 5.25% target. The first reduction the following year was a separate decision. A period of unchanged rates lay between the last hike and the start of easing. ASSETCASTING interpretation: Treating the last hike as the easing date obscures time spent under high rates. Separate increases, holds and cuts; the decision table alone cannot establish that the path independently caused the housing and credit crisis.

Evidence coverage through 2007-09-18 · Sources checked 2026-10-14

• Open Market Operations ↗

Related events and periods1

• Trade and credit expansion with accumulating financial imbalances →

  An event or period whose recorded start falls within this editorial interval. This does not establish that it caused or represents the characteristics of the era, nor guarantee that the entire period falls within the interval.